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BlackRock Energy and Resources Income Trust plc Portfolio Update

All information is at 29 February 2020 and unaudited.

Performance at month end with net income reinvested

Net asset value-8.4%-11.0%-14.2%-11.1%-9.1%2.0%
Share price-13.3%-13.9%-15.9%-21.3%-20.1%-14.2%

Sources: Datastream, BlackRock

At month end
Net asset value – capital only:65.38p
Net asset value cum income*:66.14p
Share price:56.00p
Discount to NAV (cum income):15.3%
Net yield:7.1%
Gearing – cum income:3.6%
Total assets:£77.4m
Ordinary shares in issue:113,470,349
Gearing range (as a % of net assets):0-20%
Ongoing charges**:1.5%

*Includes net revenue of 0.76p.
**Calculated as a percentage of average net assets and using expenses, excluding any interest costs and excluding taxation for the year ended 30 November 2019.

Sector Analysis% Total Assets^Country Analysis% Total Assets^  
Integrated Oil, Gas and Energy37.7Global63.9
Diversified Mining19.6USA13.5
Exploration & Production6.0Brazil3.1
Silver3.6Latin America1.4
South Africa0.9
Net Current Liabilities^-0.4Net Current Liabilities^-0.4

^ Total Assets for the purposes of these calculations exclude bank overdrafts, and the net current asset figure shown in the tables above therefore exclude bank overdrafts equivalent to 3.2% of the Company’s net asset value.

Ten Largest Investments
Region of Risk% Total Assets
First Quantum Minerals*Global8.2
Royal Dutch Shell ‘B’Global5.8
Barrick GoldGlobal5.5
BP GroupGlobal5.3
Newmont MiningGlobal3.8
Rio TintoGlobal3.6

*The holding in First Quantum Minerals includes both an equity holding and a holding in several bonds.

Commenting on the markets, Olivia Markham and Tom Holl, representing the Investment Manager noted:

The Company’s NAV decreased by -8.4% during the month of February (in GBP terms).

Global equity markets fell sharply in February as it became apparent that the coronavirus was spreading globally with a likely greater impact on economic activity. For reference, the MSCI World Index fell -8.5%. China’s response to attempt to contain the spread of the virus included placing a number of cities and towns on lockdown, which meant Chinese factories could not operate and caused supply issues across many industries, whilst air travel was restricted to certain high virus risk destinations.

Against this macroeconomic backdrop, oil prices decreased, with Brent and WTI returning -9.1% and -13.2%, to end the period at prices of $53/bbl and $47/bbl respectively. At the start of the year, market expectations were for 2020 oil demand to grow 1.0-1.2m b/d in 2020. We would expect growth to be materially lower and it could even turn negative. If so, it would mark only the third time oil demand has contracted in the past 35 years. The oil production outage in Libya continues to offset some of the fall in demand.

Mined commodity prices came under pressure, with zinc, and iron ore returning -9.1% and -12.7% respectively. Aluminium and copper were broadly flat over the month returning -1.7% and +1.2% following price declines last month. The gold price was flat +0.0% on the month and remains 5% higher than at the start of the year, at $1,587/oz, reaffirming its safe haven status in times of market volatility. Similar to last month, gold equities lagged the gold price, partly reflecting the strong performance of the mid-cap gold companies in Q4 2019.

All data points in US Dollar terms unless otherwise specified. Commodity price moves sourced from Thomson Reuters Datastream.

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